(ii) Advise Clifford of the capital gains tax implications of the alternative of selling t

Question

(ii) Advise Clifford of the capital gains tax implications of the alternative of selling the Oxford house and

garden by means of two separate disposals as proposed. Calculations are not required for this part of

the question. (3 marks)

Answer 1

正确答案：
(ii) The implications of selling the Oxford house and garden in two separate disposals
The additional sales proceeds would result in an increase in Clifford’s capital gains and consequently his tax liability.
When computing the gain on the sale of the house together with a small part of the garden, the allowable cost would
be a proportion of the original cost. That proportion would be A/A + B where A is the value of the house and garden
that has been sold and B is the value of the part of the garden that has been retained. Principal private residence relief
and taper relief would be available in the same way as that set out in (i) above.
When computing the gain on the sale of the remainder of the garden, the cost would be the original cost of the property
less the amount used in computing the gain on the earlier disposal. Principal private residence relief would not be
available as the land sold is not a dwelling house or part of one.